Indonesia urges Brazil, Vietnam to cut coffee supply

Indonesia urges Brazil, Vietnam to cut coffee supply

JAKARTA (JP): Disappointed with the failure of the world's
coffee retention plan, Indonesia's coffee exporters have urged
major producing countries Brazil and Vietnam to limit coffee
supplies onto the international market in an effort to prop up
prices.

Vice chairman of the Association of Indonesian Coffee
Exporters (AEKI) Nuril Hakim said on Thursday that a supply
reduction from the two major coffee producing countries was
crucial to helping ease a protracted market glut.

"As the world's retention plan is failing, we will ask Brazil
and Vietnam to reduce their supply onto the international market
so coffee prices can move up," Nuril was quoted by Antara as
saying.

Brazil and Vietnam are the world's largest coffee producers,
as well as exporters, producing some 1.95 million tons and
720,000 tons a year respectively which accounts for 38 percent of
the world's total coffee output of 6.84 million tons.

Nuril said the association would insist on the supply
reduction during the upcoming meeting of the Association of
Coffee Producing Countries (ACPC) to be held in London next
September.

Nuril did not specify as to how far Brazil and Vietnam must
limit their coffee supplies, saying only that they should be
curtailed "until supply and demand on the international coffee
market have reach their equilibrium level."

In addition to the reduction, the association would also lodge
proposal with the International Coffee Organization to help
finance the country's campaign to boost domestic coffee
consumption, Nuril said.

Increasing domestic consumption was another alternative for
lessening the pressure on coffee prices, Nuril said.

"Indonesia's coffee consumption level is very low at 0.6
kilograms per capita per year. We want to raise it to one
kilogram," Nuril said.

The association expected the above measures to be more
effective in raising coffee price than the failed retention plan.

"The coffee retention plan is still viable if the retained
coffee output is as much as 50 percent, not 20 percent as
required by ACPC recently, given the massive supplies on the
international market," Nuril said.

But, according to Nuril, such a recommendation had been turned
down by major coffee producers like Brazil and Columbia during
ACPC's last meeting in May.

Nevertheless, Nuril said that Indonesian exporters had adopted
a self-financed "voluntary retention" scheme by retaining some
60,000 tons of its stocks in a bid to help lift prices.(03)